The Government has been accused of “moving the goalposts” on investment in renewables after the announcement that the Carbon Price Floor (CPF) is to be frozen until the end of the decade.

Although Chancellor George Osborne said the Government was committed to the CPF’s role in stimulating investment in low-carbon infrastructure, it was capping the support rate at £18 per tonne of CO2 from 2016-17 until the end of the decade to limit any competitive disadvantage faced by British firms.

The move is expected to save businesses up to £4bn by 2018-19 and a further £1.5bn in 2018-19, while also shaving £15 off a typical household energy bill. Energy intensive industries will also get additional help as part of an energy package Osborne said was worth around £7bn.

John Cridland, director-general of the CBI, said the announcement had put the “wind in the sails” of businesses, especially manufacturers.

“The CBI has pushed hard for this significant and much-needed energy package that will help keep manufacturing jobs in the UK, while underpinning vital investment in new energy”, he said.

Cautious welcome from energy firms

Energy UK, which represents power companies, gave the move a cautious welcome.

“In the overall interests of the UK, the energy industry supports capping the carbon price floor to keep costs down for heavy industrial energy users, to reduce the potential to create a cliff edge for coal generation, and to help make sure there is more capacity available.”

Paul Massara, Chief Executive at RWE Npower, said the move would help “improve the balance between moving Britain to a low carbon energy system as fast as possible and the burden this places on Britain’s energy bills”